Ikea CEO’s urgent message to Aussies

THE global head of Swedish furniture giant Ikea has called on the Australian government and consumers to do more to combat climate change, warning "we have passed the point of debating" whether the phenomenon is real or not.

Jesper Brodin, the former chief executive of Ikea Sweden who took over as global CEO in September last year, said the company wanted to lead by example through its sustainability strategy dubbed "people and planet positive".

"The end goal is to have a positive impact on both people and planet," he told news.com.au during his first visit to the country this week.

"The notion is that in the future there will be more people who have thin wallets and want to have lovely homes, and one way or another that needs to be facilitated. The equation that we are cracking is how do you do that in a way so you have a positive impact. That is easy to say, it's easy to get energised about, but then it's hard work."

Mr Brodin, who recently attended the United Nations Climate Change Conference in Poland, said Ikea was a world leader in sustainability. "Sometimes that makes me happy, sometimes that makes me worried that not more companies are at the pace we are running," he said.

Ikea has committed to powering its entire operations on renewable energy by 2020 and is increasingly trying to "crack formulas for circularity" with its products and supply chain.

In Australia, a pilot recycling program at the Tempe store where people can return their used Ikea furniture will soon be rolled out across the country, while the Richmond store is trialling technology that dries out food waste to be sent back to farmers.

By 2025, Ikea has pledged to be using entirely electric vehicles for its delivery fleet, with the Australian distribution centre to get its first three trucks in coming months.

"When it comes to the whole value chain, we find ways, everything from sequestration to other means to make sure also that the energy footprint from the forest all the way to the store is also covered by that, but that's going to take all the way until 2030," Mr Brodin said.

Ikea currently sells low-cost solar panels in six countries and Australian consumers will be able to purchase them by November or December this year. "We are going cost-neutral, so this is not something we are going to make profit from, because we feel that this is the right thing to do," said Ikea Australia country manager Jan Gardberg.

Acknowledging climate change and energy policy were contentious political issues in Australia, Mr Brodin said Ikea generally stayed out of "religion and politics". "But if I dare to say, we have committed ourselves to an agenda," he said.

"That not a secret, it's in our 'people and planet positive' strategy, we communicate it and we have decided where we place ourselves in this topic, what we believe in, for good reason. We have passed the point of debating whether climate change is real or not. It is real, it is a serious issue for not only the next generation but the generation today.

"We start with ourselves. We say, this is what we believe in and you can count on us being a leader in this. So in Australia, the government, consumers, other companies can count on us in being an active leader in the area of sustainability."

Mr Brodin said Ikea had "huge respect" for politicians on either side of the aisle attempting to manage the economy. "But the way we view it is that energy is going to get more expensive unless we find new ways," he said.

"On one hand it is the right thing to do, secondly from a business model perspective, we anticipate that if you don't place yourself as a leader in this, you're going to get expensive, because the scarcity of raw material and energy is not going to go away."

Asked whether Ikea's green push would ultimately lead to higher prices for its products, Mr Brodin said it was the opposite.

"What we believe - but I don't have the facts on it and nobody has that, this is a matter of believing at the end of the day - is that the only way we can become low price in the future is to be people and planet positive," he said.

"It's not so difficult to understand. If the cost of producing with material and the high share of material cost in anything that we do goes up, of course we will not be able to absorb that then we have to shift it to our customers.

"By adding in circularity, by having smart schemes for energy, we think that's the only way we can be affordable tomorrow. But if you ask me do I have all the proof for it, no we don't today."

But he cited Ikea's switch to entirely LED light bulbs five years ago as a positive indicator. At the time, LED light bulbs were 10 times more expensive than incandescent light bulbs.

"We said we would like to step out of incandescent light because it consumes 50 times more energy," he said.

"But when we looked at it, (we saw it would mean) we're going to be too expensive. But then we took a leap of faith, said this is the date we're taking it out regardless of what happens. Luckily we were able to bring down prices and the business has boomed, now we are 100 per cent LED."

Since 2009, Ikea has invested 1.7 billion euros in renewable energy and says by next year it will have enough generation to power its entire operations. The company currently owns and operates 441 wind turbines across 13 markets and 750,000 solar modules in 22 markets.

Mr Brodin said Ikea was "absolutely interested" in funding renewable energy projects in Australia. "We would be interested to do that anywhere where the conditions are right," he said.

"We go where there's wind, we go also where the financial situation is beneficial. When we began that journey, in the beginning it was limited, technology was more expensive, the energy schemes were not up and running, so countries are in different stages in that, but we are absolutely interested to have that dialogue anywhere including Australia."